“We are handling increased volumes at a time when Asian crude production has fallen”.
Advertisement
However, there were no details on any deal to freeze oil output around current levels and Novak later told Al-Arabiya television that doing so won’t be necessary at this time.
Brent and West Texas Intermediate crude prices gave back gains on Tuesday as the likelihood that a production freeze agreement will be signed continue to fade. To start the week WTI crude is trading at $45.17 per barrel and Brent crude is trading at $47.63. After all, OPEC countries have a poor record historically of sticking to production quotas, usually producing well above official quotas and thus undermining any price effect thanks to this “cheating”.
The agreement was announced on the sidelines of the G20 summit being held in Hangzhou, China. “They under-delivered in the sense that it was quite vague in terms of targets for output”.
Both countries’ energy ministers are set to meet later this month at a meeting of the International Energy Forum in Algeria, and again at a meeting of the oil cartel OPEC in November, where they said they would further discuss their cooperation. Back in April, the proposal to agree on output got derailed as Saudi Arab – the de facto leader – was reluctant to cap output unless Iran follows suit.
OPEC’s third largest producer, Iran has stated that it would only participate in the oil freeze talks if fellow producers allow it to achieve its full market share.
While the Saudi minister played down the prospect of imminent action, his Russian counterpart Alexander Novak said he was open to ideas on what cut-off period to use if countries chose to freeze output and said even production cuts could be considered.
“Differences still remain and will reinforce already heightened levels of scepticism that supply will soon be restrained”, said Stephen Brennock of oil broker PVM.
Separately, we maintain that with Saudi Arab’s strong deliverance of Vision 2030 reforms, oil supply can see a significant decline. But overnight, there seems to have been a discrediting of that reaction, and an interpretation of the joint comments lacking conviction with regard to actually taking action on supporting oil prices.
A barrel of West Texas Intermediate for October delivery rose 39 cents to close at US$44.83 in NY.
Advertisement
Any deal between OPEC and non-OPEC producer Russian Federation would be the first in 15 years since Moscow agreed to cut output in tandem with the cartel at the turn of the millennium, although Russian Federation never followed through on that promise.
